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How would Order XXI Rule 16 of CPC affect the provisions of Section 146?

Court Name:  The Supreme Court of  India

Judgment Name: Vaishno Devi Constructions v The Union of India

Judgment Date: October 21st, 2021

Judges/Bench: J. Sanjay  Kishan Kaul and J. B. R. Gavai.


The judgment mentioned here is an appeal from the state high court, where the parties have entered into a contract for the construction of a runway and there were subcontracts, wherein the party failed to pay the salary dues sadly the party has passed away in the year 2012, and the legal heir of the party is also a question of fact, among the members.

Brief Facts of the Case:

  • On December 29, 1995, the Union of India granted a contract to one Surendra Nath Kanungo @ S.N. Kanungo for the execution of the construction of runway expansion at Port Blair Airport. Shri S.N. Kanungo made an agreement under which the Works were outsourced to Vaishno Devi Constructions, a sole proprietorship business owned by Prabhat Bhushan Kanungo.
  • Hereafter, Appellant No. 2 Surya Prakash was taking care of the work, and some part of the work was assigned to Beedee Builders a sole proprietor of Swapna Das, and her husband Bijoy Das was playing a role in executing the works as they were appellant no. 1 and 2.
  • Shri S.N. Kanungo was a special class contractor, and it appears from the case established by the appellants that they were to act on behalf of S.N. Kanungo to carry out the Works for which they were to be paid monthly remuneration and hiring charges for certain equipment to be provided by the appellants herein. On 27.10.1999, Shri S.N. Kanungo is said to have executed an Assignment Deed and a check in the amount of Rs.1 crore in favor of Mr. Prabhat Bhushan Kanungo as security to ensure payment of such dues. Both appellants’ claims were involved.
  • A dispute arose between S.N.Kanungo and Respondent no. which was referred to the arbitration and a reward was awarded, another set of nonpayments was the Calcutta High Court awarded the reward Under 34 of the Arbitration and Conciliation Act, the judgment was reversed, and the appeal was granted.
  • For the recovery of the amount, S.N.Kanungo filed an execution case before the District Judge, during which respondent no.1 filed an SLP challenging the judgment in the Supreme Court.
  • A notice was issued on 17.04.2017 to maintain the status quo pending the disposal of the matter.

Contentions of the Appellants: The Appellants content that they were the authorized representatives after the death of S. N. Kanungo, they relied on the modified provisions included in Order 21 Rule 16 of the CPC in their application under Section 47 of the CPC, stating that Shri S. N. Kanungo willingly completed an assignment deed on 27.10.1999, which is a document in writing, while concurrently issuing a cheque as security.

Contentions of the Respondent:

The respondent claimed that the assignment deed is a disputed document that had not been in light for 17  years till 2016 and does not find a mention in the appellants’ legal notices.

Principles and Observations of the Court:

The honorable court, in this case, happened to examine and explain the following sections as per the need and thee the interpretation of certain facts and judgments of the cases were also done they being, Order XXI Rule 16 of CPC, Order 22 Rules 1&2 of CPC, Selection 2(1)(g) and 36,34 of Arbitration and Conciliation Act, Section 146 of the CPC, and the cited cases being Jugalkishore Saraf v/s. M/s. Raw Cotton Co. Ltd, Purna Chandra Bhowmick v. Barna Kumari Devi, Penniah Pillai v. T. Natarajan Asari, K.N.Sampath Mudaliar v. Sakunthala Ammal.

Judgement Held:

  • The provisions of the CPC were therefore attempted to be applied to these proceedings for execution of an award, which had resulted in a decree in the capacity of an assignee/representative to claim from Shri S.N. Kanungo on account of the assignment.
  • Order XXI Rule 16 contemplates the real transfer of the order by an assignment in writing completed “after the decree is passed,” according to para 26. Thus, while a transfer of or agreement to transfer a future decree may entitle the intending transferee to claim the beneficial interest in the decree after it is passed in equity, the such equitable transfer does not relate back to the prior agreement and does not render the transferee a transferee of the decree by an assignment in writing within the meaning of Order XXI Rule 16 of the CPC.
  • Based on the evidence, there is little doubt that the challenged judgments would have been perfectly in conformity with the law if the 1976 revisions had not been made, and would have been fully covered by the Jugalkishore Saraf decision. As a result, the sole factor one must assess is whether the change made any difference to the legal position as stated in the aforementioned ruling.
  • The Law Commission of India’s recommendations in its 54th Report on the Code of Civil Procedure, 1908. The Explanation was introduced in response to contradictory High Court rulings on the issue, namely, whether a person who does not have a written assignment of the decree but has succeeded to a decree holder’s right is entitled to a such decree under Section 146 of the CPC.
  • As a result, the Law Commission suggested changing Order XXI Rule 16 to clarify that it does not impair Section 146 provisions and that a transferee of rights in the subject matter of the suit can acquire execution of a decree without separate assignment of the order. The goal appears to be to resolve the problem of assignment in the execution procedure itself, rather than in many hearings.
  • The court expressly states that the legitimacy of the document, the Assignment Deed, or the check is a matter for the executing court to consider. The question was whether, at the threshold, the appellants’ argument might be dismissed on the grounds that they were assignees who had acquired the rights prior to the decree’s passage. Despite the significant delay, the rest of the work would be done by the executing court.

My Opinion:

In my opinion, I agree with the decision of the court, that the confusion of the amendment being implemented had taken place due to the decisions of various high courts which were taken depending upon the circumstances of the facts of the case.

The court has taken the right move by bringing clarity by taking the decisions of various high court’s into consideration.

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